Emerging Markets Fashion
Emerging
Markets Fashion, New Trends and Growth
If you’re in the fashion industry, emerging markets
need to be part of your growth agenda. In too many cases, however,
expanding into emerging markets is just shorthand for moving into the BRICs
(Brazil, Russia, India and China ). That’s because emerging-market cities are capturing most of the global growth in fashion
industry. Some 80 percent of top growth cities for total apparel sales by 2025
will be in emerging markets. Together, these cities will enlarge world apparel
markets by an additional $100 billion.
One of the most
dramatic developments in the emerging markets revolution is the growing
economic power of cities and the extreme growth concentrated in a limited
number of mega-cities. The world’s top 600 cities (ranked by absolute GDP) are expected
to drive almost two-thirds of the global economic growth by 2025. Massive
urbanization will continue across emerging markets, which will contain
three-quarters of these large cities. In that time frame, there will be 60
megacities—more than double today’s number of urban behemoths. GDP in each of
these megacities will exceed $250 billion in 2025, accounting for fully
one-quarter of global GDP.
Despite the overwhelming scale of megacities like
Shanghai, São Paulo, and Moscow, fashion industry should not miss the
importance of the many cities that are not as large, but still significant.
Emerging-market countries have more than 400 of these “middle-weight” cities,
which are expected to account for about 30 percent of global GDP growth by
2025. Harbin (China), Luanda (Angola), Puebla (Mexico), and many others will be among
the top 100 fastest-growing cities. Within 15 years, these 400 middle-weight cities will be generating wealth equivalent to the entire
U.S. economy today. Worth pointing out is that this growth is not just an
emerging-markets story: over 100 medium-sized cities in developed countries are
expected to contribute 10 percent of global growth.
While growth across these 600 cities is significant,
apparel companies need to understand which ones have the best likelihood of
driving growth for their product. The top 600 cities will account for 85
percent of the growth in the luxury apparel market, for example, versus a 60
percent share in midmarket apparel. For fast-moving consumer goods (FCMG),
those cities will only account for an estimated 40 percent of growth. At the
same time, midmarket and luxury apparel growth is not uniform across cities.
Midmarket apparel will grow more dramatically in some cities, like São Paulo,
while luxury apparel will see significant growth in others, like Singapore and Milan.
The fast growth of
the emerging cities does not mean that mature markets are becoming irrelevant;
far from it. When we look at total size, mature-market cities will still have
half the fashion market worldwide. Analysis of growth concentration by city
reveals extensive growth in the U.S. and Europe, in cities such as Los Angeles,
Paris, and London. Growth in the luxury markets especially is still heavily
dependent on these mature markets, where 80 percent of top-growth cities for
luxury goods are located.
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